Let’s Share the Network Fairly that Canadians Helped Build

In my last post, I mentioned I would offer two solutions on how the CRTC can do the right thing by bringing Canadians who use the Internet together rather than tear them apart.

The Internet: Always-On, Always Available

The Internet offers tremendous economic opportunities to countries and their citizens that didn’t exist a decade ago. While some may consider it a nice-to-have luxury, the Internet, simply put, is a giant powerful enabler that has become an essential service or utility, serving both individuals and groups in countless ways that few could have imagined even a few years ago. As John Naughton writes in the Guardian News in an article called Why it’s time to get off the fence about net neutrality, “the reason the internet has been such a powerful enabler of innovation is that it is, at its core, a meritocratic network which is not owned or controlled by anyone.”Naughton goes on to describe how the Internet complements an entrepreneurial spirit in the following passage.

“It was [net] neutrality that enabled the explosion of creativity triggered by the network. As Barbara van Schewick explains in a compelling book, Internet Architecture and Innovation, one implication of net neutrality was that the barriers to entry to the online market were incredibly low: all you needed was a good idea, programming skills and enough money to rent space on a server. So it’s no accident that some of the most iconic internet businesses – Amazon, eBay, Google, Blogger and Facebook to name just five – were launched without any significant capital investment by anyone other than their founders and their friends and families.”

Two Options vs. More of the Same

Regarding the Usage Based Billing issue, I propose two options:

1. We continue to use a regulatory body, such as the CRTC, to ensure fair and equal access to the lines into each building. Providers that have put the lines into each building are free to charge what they want for Internet service. Third-party providers can then pay a fee, as they currently do, for access to these lines and provide their own Internet access across them, charging whatever they want. This way any business that wants to be in the business of providing Internet access can do so even without its own physical infrastructure, and the infrastructure provider is being compensated fairly for the use of these lines.

As a reference point, the dry-loop charge that Bell charges third-party internet service providers starts at $7.25 per month and costs Bell a couple of dollars a month in maintenance costs when amortized over the life of the line. Essentially, a structure like this means that each building may have more than one access medium available to connect to the Internet whether over TV cable, phone lines, power lines or wirelessly. You don’t have to be an IT guru to realize that it doesn’t make much sense to have more than one entity provide, manage, and maintain the physical lines into a building so long as they are high speed and allow for multiple services. Much like our electricity and our water, having two providers for each of those utilities in the market owning the transport infrastructure does not make much sense. This idea is one the CRTC is aware of since it mandated Bell to share its phone lines with other carriers, such as Allstream and Primus for phone service, without requiring the latter to run physical lines. Therefore, my first proposal is somewhat similar to the current system, although, it can be taken a step further.

2. The second option or alternative is to create a public entity whose sole mandate is to provide and maintain the physical communication lines into a building. This would lead to a provider, whether a traditional Telco or access company such as Bell or Rogers, or a new upstart such as TekSavvy or Odynet, to pay the new public entity for access to the line. The key point is that this line would provide not only Internet service but also a full range of services supporting telephone, television and other yet to be determined services.

This concept is not new; Ontario has been using this approach for electrical power for a number of years now. The single physical link would have ample bandwidth and capacity. Moreover, if a fiber optic technology were installed, the line would be highly durable, would experience minimal or even zero interference and bandwidth availability would be virtually limitless. This solution creates a level playing field for any provider to effectively compete by introducing value added services, such as capacity, customer service and support, or other differentiators that customers want.

Additionally, the security concerns of foreign ownership of our communications infrastructure would not be an issue, as the public would own the physical links. If a foreign competitor wanted to enter and offer service under our rules they would be allowed. Ultimately, consumers would choose their prefered service provider just as with any other competitive service in Canada.

While some may see this as an extreme alternative, it is a simple and fair solution. In Canada, telecommunications companies have consistently disappointed consumers. They have been afforded special protection to operate as a virtual monopoly and subsequently use public money to build out their networks.

Ultimately, we cannot rely on the natural duopoly of telephone and cable to compete effectively for Internet access and other services. The television show Agenda aired a segment called UBB, CRTC, OMG, which offers an excellent depiction of how the duopoly Internet access business in Canada holds consumers hostage. These companies need to learn to share the networks Canadians helped build. Alternately, we need a public strategy that gives everyone in Canada the access they deserve without allowing big players an unfair advantage and monopoly.